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Stockpile Squeeze

The housing sector appears to be suffering from two inventory headaches. One is an enormous backlog of unsold homes. The other, a seemingly inexhaustible supply of bad news.

Following on a report yesterday showing flagging demand for existing homes, the Commerce Department said sales of new single-family homes dropped last month to a seasonally adjusted annual pace of 915,000, down 1.6% from April, when sales showed a surprisingly robust 12.5% increase. The decline was not as steep as economists expected -- forecasters polled...